VWA to Offer Hybrid, Diesel Options in Four Core U.S. Models to Come

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North American Int’l Auto Show

DETROIT – Volkswagen AG has four new core, U.S.-focused products set for debut over the next couple of years, and all will feature diesel and hybrid/electric powertrain options.

The four vehicles include a revamped Jetta due in 2010; the all-new midsize sedan that will be built beginning 2011 at a plant under construction in Chattanooga, TN; plus two other Polo-sized models, Volkswagen of America President and CEO Stefan Jacoby says in a media backgrounder behind the scenes at the North American International Auto Show here.

The new models are considered critical to VWA’s goal of selling 800,000 vehicles annually by 2018. Last year, the auto maker delivered 223,127 light-vehicles in the U.S., Ward’s data shows.

Despite the slumping U.S. market and global economic downturn, “we are going to continue to invest in products,” Jacoby says.

The revamped Jetta, which will continue to be built in Mexico, will be the first car off Volkswagen’s new modular architecture, pieces of which were used to create the Bluesport concept roadster that bowed here on Sunday.

The larger Chattanooga sedan, which will be sized against the Toyota Camry and Honda Accord, also is likely to use that architecture.

The other two models, which Jacoby expects to fill out the core of VW’s North American lineup, will be smaller, Polo-sized vehicles. VW still is determining body styles for the two vehicles and is considering a small sedan or hatchback, compact cross/utility vehicle or multipurpose vehicle.

Hybrids to be profitable, Jacoby says.

There have been so many shifts in consumer demand in the U.S., “we still have to see which way to go,” Jacoby says.

It is unclear whether the smaller models will be built in Chattanooga alongside the new midsize car, but Jacoby acknowledges VW has indicated it would like to produce additional vehicles at the plant just beginning construction.

Also hinting in that direction is that the smaller vehicles, like the upcoming midsize sedan, will be designed specifically for the U.S. The midsize car will not be sold in Europe, Jacoby says.

VWA will continue to import other non-core models, but Jacoby won’t say whether the Passat sedan will stay in the lineup once the Tennessee car bows.

The hybrid versions of the Jetta will be built in Mexico, and the Chattanooga plant will assemble the hybrid midsize car.

The Jetta hybrid plan has been in the works at least since 2005. At the time, VW said it would offer hybrid options in the Jetta and then-in-development Audi Q7 CUV as of 2008.

The Q7 plan was dropped last year, when Audi decided to concentrate instead on a hybrid version of the Q5 CUV. The Jetta plan now awaits launch of the all-new vehicle architecture.

What type of hybrid system will be used is unclear. Jacoby says VW still is studying whether to offer a more conventional gas-electric hybrid powertrain or plug-in technology.

He says it is impossible to pinpoint hybrid sales expectations because of uncertainty over fuel prices and government policy, adding the technology still has “significant disadvantages” in terms of added weight, battery life and performance compared with diesel engines and other conventional fuel-efficient technology.

But he does believe VWA will be able to make money on hybrids.

The auto maker is more bullish on diesels, which have been a hot commodity in the Jetta since going on sale last year.

Jacoby expects diesels ultimately will account for 30% of sales in vehicle lines where the engines are offered.

VW also is developing electric vehicles, but Jacoby says the market transition to full EVs will be a long one, with infrastructure, government policy and consumer acceptance all hurdles to their proliferation.

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